The effects of slower-than-planned airplane deliveries, air traffic control staffing shortages, and high fuel costs haven’t eluded JetBlue Airways, but the New York-based low-fare carrier recorded its first profit since before the start of the Covid pandemic in the third quarter as strong demand and higher airfares helped offset downward earnings pressure.
JetBlue plans to add a third daily flight from New York JFK and London this week with its Airbus A321LRs, more of which will come next year following the delivery of about 22 A320-family and A220 jets. Speaking Tuesday during the airline’s third-quarter earnings call, JetBlue president and COO Joanna Geraghty noted that the airline originally expected to take 29 airplanes in 2023, but supply chain constraints at Airbus have forced it to set its sights somewhat lower.
Separately, despite what JetBlue CEO Robin Hayes called significant weather and air traffic control challenges and record demand, the airline made “excellent” progress on hiring and has now reached a point of “appropriate” staffing levels. JetBlue plans to hire 1,000 pilots from now into next year and expects traffic to return to a mid- to high-single-digit growth rate in 2023, said Geraghty.
“Although we are seeing no indications of any type of drop off in air travel demand, we are keeping a very close eye on the macroeconomic environment,” she added. “As we look to 2023, we take comfort in the fact that the U.S. economy is much larger than it was prior to the pandemic while industry capacity is still below pre-pandemic levels, suggesting that our industry’s experience with a potential 2023 economic downturn could look quite different than historical downturns.”
Geraghty further noted that JetBlue’s business model has evolved since the last downturn to one based on a more segmented strategy appealing to a wider range of customers. “Our ancillary revenue base has also grown and proved stable even through the pandemic and capacity is the biggest lever we have,” she explained.
Meanwhile, Hayes stressed the positive revenue influence of the Northeast Alliance (NEA) partnership with American Airlines, which saw its New York and Boston markets benefit from “dozens” of new routes and increased frequencies on more than 100 routes.
“The NEA is doing what it set out to do [a year and a half ago], giving consumers more choice and better value, and we look forward to continuing to expand these benefits outside of the NEA,” said Hayes, thanks in part to the “synergies” promised by JetBlue’s planned purchase of Spirit Airlines, which shareholders approved on October 19.
The NEA remains the subject of a lawsuit by the Justice Department, which claims the deal would result in the consolidation of the two airlines in New York and Boston, eliminating what it called important competition in those cities and decreasing JetBlue’s incentive to compete with American Airlines elsewhere. To address those concerns, JetBlue has committed to divesting Spirit’s holdings at the NEA airports to allow for allocation to other ultra-low-cost carriers. If regulators do not approve the proposed agreement for antitrust reasons, JetBlue said it would pay Spirit a reverse break-up fee of $70 million.